2023-08-11 07:28:08
August 10, 2023 Today at 11:49 am
Despite a quarterly profit up 9% and above analysts’ expectations, KBC shares were biting the dust on Thursday morning. Here’s why.
Eyebrows must have been raised this Thursday morning at the opening of the markets when the KBC title
fell 6% before erasing, then, part of its losses to fall, once more, by 6% at mid-session.
It is that, overall, the quarterly figures unveiled before the market by the bancassurance group are more than robust with a net result of 966 million euros, up 9% and 12% above consensus analysts (863 million euros). For their part, net interest income increased by 6% “which contrasts with the 0% observed among competitors” underlines Jason Kalamboussis of ING (“buy”; 80 euros).
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KBC falls on the stock market despite the announcement of share buybacks for 1.3 billion euros
Unwelcome forecasts
Two elements have undoubtedly ruffled investors.
First of all, KBC has very slightly revised its net interest income downwards for the current year to 5.6 billion euros once morest 5.7 billion before. “The lowering of the net interest income forecast for 2023 may have come as a surprise, but it was more than offset by the improvement in the cost of risk and certain income measures”, tempers, however, Marta Sanchez Romero from Citi (“neutral”; 69 euros).
The lowering of net interest income forecasts for 2023 may have come as a surprise (…).
Marta Sanchez Romero
Analyst at Citi
Secondly, and above all, KBC announced an additional €8.2 billion on credit risk-weighted assets in the third trimester. This concerns the credit portfolio for Belgian companies and SMEs. This amount will be mitigated by various measures, KBC said. The new guidance on risk-weighted assets might “take the market by surprise and lead to an initial negative reaction”, had rightly anticipated Giulia Aurora Miotto of Morgan Stanley (“neutral”; 71 euros) before the opening of the stock market.
Redemption of shares
The announcement, in parallel, of the launch a 1.3 billion euro share buyback program has, probably, made it possible to limit the breakage.
Enough to support the KBC share price, which has nothing to be ashamed of for its performance since the start of the year with a gain of 13%.
It was decided as part of the distribution of excess capital from the sale of KBC Bank Ireland. This program will be launched as soon as possible and will last for a maximum of one year. Enough to support the share price, which has nothing to be ashamed of for its performance since the start of the year with a gain of 13% (before the fall of this day) once morest 16% for ING
and a decline of 1% for the Bel 20. ING launched a similar program last May for a total amount of 1.5 billion euros of which, to date, 249 million have already been used.
“The distribution of 1.3 billion euros – the question was regarding the distribution (dividend and/or share buyback, editor’s note) and the timing – will be made entirely through a share buyback of up to this amount, in line with our expectations and above the consensus” Flora Bocahut de Jefferies (“buy”; 86 euros).
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